CNBC has a stunning article about the precarious position the banks are putting many Realtors in. Realtors are held to a high standard because we a code of ethics that we follow. Whenever we don’t abide by these codes, we risk losing our license, our career, and jail time. And rightfully so, we are dealing with one of the biggest parts of people’s lives.
In the past couple of years, we’ve seen real estate values stumble. As a result, many of the second liens on homes are worthless. For example, let’s say you bought a home for $200,000. Your first mortgage may be $160,000, and your second mortgage, $20,000. Well, let’s assume now that your home is worth $150,000 in today’s market. If you tried to short sale your home, the first mortgage may ask to take all of the $150,000 and offer nothing to the second (obviously, the assumption here are zero fees to sell the house, which is never the case). Realistically, they make take $148,000 and offer $2000 to the second. Some deals fall apart because the second lien holder may want more than $2000 to sign off. In fact, to try to get more they may even rather foreclose than take $2000. Sounds dumb, right? Believe me, these banks are dumb! They’d rather get zero.
Well, some of these banks are trying something scandalous now. They are now asking buyers and Realtors to pay them outside the escrow. That means that they want to get paid without letting the first bank know. Seems innocent enough? Maybe even a good idea? Sure, if you like going to jail. Any time money moves around, and it is not on a HUD-1 document, it is a violation of RESPA laws. That means don’t pass GO, and go directly to jail. The scariest part of all this is that there are buyers and Realtors that have agreed to these blatant violations of the law. For a buyer to be involved, that means both the buyer’s Realtor and the seller’s Realtor were in on it! I don’t care how much money is at stake, the law is the law!
Fortunately, I have not been asked to do this. I’d much, much rather work at McDonald’s than spend time behind bars. That’s a personal preference, I guess. To read more about this craziness, go to http://www.cnbc.com/id/34877347.
I agree with you. As a real estate agents, we have to be true to ourselves. Money will not last, but integrity will.
Banks are looking for anyway possible to make as much of their losses back as quickly as possible. Eventually this cycle will come back around and bite them. The entire banking systems needs a huge overhual.
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